Pursue Real-Time Pricing

"Reprinted from the September/October 2006 edition of ELECTRIC LIGHT & POWER.
Copyright 2006 by PennWell Corporation."

Equip consumers with advanced metering instead of engineering capacity markets

Ensuring power supply adequacy is a vexatious and illusive goal in a number of populous regions of the United States. Recent efforts to create capacity markets in addition to energy markets, or to improve their performance, have proven contentious, threatening at least one organized market, ISO New England, with defections.

In most cases proposed solutions would require load servers to purchase, for future periods, a prescribed level of capacity offered in an auction at prices determined in reference to negotiated, sloping demand curves that purport to (but rarely do) produce capacity prices equal to the cost of new market entry, net of energy and ancillary service sales revenues.